Real Estate Financing
Louisiana Real Estate Financing
One of the most important steps in purchasing a home or commercial property is obtaining financing. Unless you are paying cash, the first step in any real estate transaction is understanding the qualification process and costs associated with various real estate financial products. Before searching for properties, a buyer should consult with his or her real estate agent to discuss pre-qualifying for a real estate loan. Many sellers today require a pre-qualification letter to accompany a purchase agreement.
There are many ways to obtain financing for a real estate purchase; some of the most common avenues are, FHA loans, VA loans, and Conventional loans.
FHA loans are the most common type of loan for residential home buyers, and because these loans are backed by the federal government’s Federal Housing Administration they require a lower down payment (3.5%) as compared to conventional loans and often times have more lenient credit requirements.
VA loans are a good option for financing residential real estate if you are qualified veterans or spouse of veterans that died during service. To obtain a VA loan one must first apply for a Certificate of Eligibility “COE”.
Conventional real estate loans are offered by most local, regional and national banking institutions. Unlike FHA loans, conventional loans typically require a larger down payment and more stringent credit requirements. Conventional loans are a good option if you are purchasing a secondary residence, investment property, or of you have outstanding federal loans.
Some purchasers do not qualify for the more traditional means of financing; this can be because of bad credit, outstanding federal loans or other debt to income related issues. In the event that a potential buyer cannot obtain financing through the traditional avenues, creative financing techniques should be considered. A savvy real estate agent will be well informed in various creative financing techniques. Some important creative financing methods include, owner financing, bond for deed, private equity loans, lease purchase contracts, option contracts and first rights of refusal.